Cleared to Care: New Wisconsin Statute Allows “Benefit Corporations” to Consider Social Impact of their Corporate Actions
On November 27th, Wisconsin became the most recent U.S. state to enact legislation allowing a for-profit corporation to qualify as a “benefit corporation” under state law. A benefit corporation is essentially a socially responsible, for-profit business that is permitted by law to consider the effects of its corporate actions on society and the environment, rather than being obligated to merely consider shareholder value, as Wisconsin law previously required.
The new law requires a benefit corporation to have a purpose of creating “general public benefit,” which is defined as “a material positive impact on society and the environment by [the benefit corporation’s operations] taken as a whole, through activities that promote some combination of specific public benefits.” The law permits the corporation to identify in its articles one or more “specific public benefits” that the corporation will undertake in addition to its general public benefit, including the following:
(a) Providing low−income or underserved individuals or communities with beneficial products or services.
(b) Promoting economic opportunity for individuals or communities beyond the creation of jobs in the normal course of business.
(c) Preserving the environment.
(d) Improving human health.
(e) Promoting the arts, sciences, or advancement of knowledge.
(f) Increasing the flow of capital to entities with a public benefit purpose.
(g) The accomplishment of any other particular benefit for society or the environment.
The benefit corporation law will take effect in Wisconsin on February 26, 2018. Until then, stay tuned for further updates from Boardman & Clark on this new and exciting statute, including a discussion of eligibility requirements for benefit corporations and tips for preparing a business and its shareholders to convert to a benefit corporation. The text of the legislation can be found here: https://docs.legis.wisconsin.gov/2017/related/acts/77.pdf
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.